Klarna’s guidance cut exposes the BNPL growth divide

• Klarna posted Q2 2026 revenue of $1.042 billion (+27%) and GMV of $36.6 billion (+18%), while turning a $46 million operating loss a year earlier into a $27 million operating profit and $9 million net income.
• Despite stronger profitability and transaction margins, Klarna cut its full‑year GMV outlook to $149–151 billion, citing weaker German consumer spending and ongoing sensitivity to credit conditions.
• Compared with peers, Klarna is larger than Affirm and Sezzle on GMV but faces similar pressure to show that higher per‑transaction economics can offset slower volume growth, while Block and PayPal embed BNPL within much broader payments ecosystems.

The BNPL sector is still growing, but investors are increasingly focused on the quality of that growth rather than volume alone.

Klarna’s latest results highlight this shift: even as revenue and profits improve, a softer GMV outlook was enough to drive a sharp share‑price reaction.

Klarna Group (NYSE:KLAR)

Klarna provides installment payments, longer-term financing, cards and other digital banking products.

Q2 GMV reached $36.6 billion, up 18%, while U.S. GMV increased 27%. 

Revenue rose 27% to $1.042 billion.

Transaction margin dollars increased 42% to $446 million and represented 42.8% of revenue.

Operating income reached $27 million, compared with a $46 million loss a year earlier. 

Net income improved to $9 million from a $53 million loss.

Credit-loss provisions declined to 0.52% of GMV from 0.56%.

Klarna also reported more than 120 million active consumers and over 1.2 million merchants. Its merchant base increased 54% year over year.

The company now projects full year GMV of $149 billion to $151 billion and revenue of $4.08 billion tp $4.16 billion. 

The revised outlook puts the focus on whether higher transaction economics can offset slower volume growth.

Affirm Holdings (NASDAQ:AFRM)

Affirm is one of Klarna's closest listed competitors in point-of-sale installment financing.

Its fiscal Q3 2026 GMV reached about $11.6 billion, up 35% year over year.

Revenue increased roughly 33% to about $1.04 billion.

Affirm also moved further into profitability.

GAAP operating income reached $88 million, compared with a $161 million loss in the prior-year period. 

Adjusted operating income reached $281 million.

Net income was approximately $103 million.

The platform had roughly 27 million active consumers and more than $46 billion of trailing 12-month GMV as of March 31.

Affirm's direct overlap with Klarna includes installment lending, merchant checkout integrations and consumer payment products.

Its next fiscal results are scheduled for August 27, making its updated outlook another test of current BNPL demand.

Sezzle (NASDAQ:SEZL)

Sezzle operates a smaller BNPL platform but is currently growing volume and revenue faster than many larger payments companies.

Second-quarter 2026 GMV reached about $1.3 billion, up 37.9% year over year.

Revenue increased 51.7% to $149.7 million.

Net income rose 47.7% to $40.8 million, while adjusted net income reached $39.3 million.

Adjusted EBITDA increased 51.3% to $58 million.

Sezzle also reported 3.2 million active consumers and $4.6 billion in trailing 12-month GMV as of June 30.

The company increased its 2026 adjusted net income guidance to $185 million and adjusted diluted EPS guidance to $5.25.

Sezzle remains much smaller than Klarna, but its growth provides a direct comparison for consumer adoption and BNPL monetization.

Block (NYSE:XYZ)

Block owns Afterpay, putting it directly into the installment-payment market alongside Klarna and Affirm.

Its wider business also includes Cash App and Square, meaning BNPL represents only part of the group.

Block reported Q2 2026 gross profit of $3.17 billion, up 25% year over year. 

Adjusted operating income margin reached 27%, while adjusted diluted EPS increased 65% to $1.02.

Both Cash App and Square contributed to the quarter's gross profit growth.

Afterpay remains Block's main direct connection to Klarna. 

The service lets consumers split purchases across scheduled payments and is increasingly integrated with Cash App.

Block said in January that its lending products — Cash App Borrow, Afterpay and Square Loans — had collectively provided more than $200 billion in credit since their launches.

The diversification makes Block less dependent on BNPL than Klarna, but it also gives the company several channels for distributing consumer credit products.

PayPal Holdings (NASDAQ:PYPL)

PayPal competes with Klarna through online checkout, digital wallets and its own buy now, pay later products.

Its scale is considerably larger.

Second-quarter 2026 total payment volume reached $486.4 billion, up 10% year over year. 

Revenue increased 5% to $8.682 billion.

PayPal reported GAAP operating income of $1.427 billion and net income of $1.104 billion.

Transaction margin dollars reached $3.9 billion.

Active accounts totaled 439 million, while the company processed 6.75 billion payment transactions during the quarter.

PayPal also generated $1.8 billion in adjusted free cash flow and repurchased $1.5 billion of stock during Q2.

For 2026, PayPal raised its non-GAAP EPS forecast to approximately $5.38 while maintaining its GAAP EPS outlook for a mid-single-digit decline.

PayPal's results provide a broader payments benchmark for how quickly BNPL-focused companies are growing relative to established digital-wallet platforms.

The bottom line

The BNPL market is expanding, but growth alone is no longer the only metric driving market reactions.

Klarna increased Q2 revenue by 27%, produced $9 million in net income and raised its transaction margin dollar forecast. 

Yet its lower GMV outlook triggered a sharp share-price decline.

Affirm and Sezzle are reporting faster GMV growth, while Block and PayPal offer BNPL inside much larger financial ecosystems.

The central issue across the group is the balance between volume and economics.

Higher payment activity must still cover funding costs, credit losses, merchant incentives and operating expenses.

For Klarna, that trade-off is especially visible: the company now forecasts less 2026 GMV than before, but more transaction margin dollars per unit of volume.